Lake­land sees op­por­tu­nity in hard Brexit

The Irish Times - Business - - BUSINESS NEWS - EOIN BURKE-KENNEDY

Lake­land Dairies, the State’s largest cross-Bor­der dairy busi­ness, be­lieves it could steal a march on ri­vals in the event of a hard Brexit.

Chief ex­ec­u­tive Michael Han­ley said the co-op’s sig­nif­i­cant busi­ness foot­print in the North gave it a nat­u­ral hedge against the prospect of the UK fall­ing be­hind a tar­iff wall.

“In a hard Bor­der sce­nario and re­ver­sion to WTO (World Trade Or­gan­i­sa­tion) tar­iffs we’d be locked into one of the high­est re­turn­ing mar­kets in the world while the rest of Europe would be locked out,” Mr Han­ley said. “So we can max­imise the equa­tion for our farm­ers in the event of high tar­iffs,” he said.

How­ever, he ac­knowl­edged the farmer-owned co-op’s busi­ness model was cur­rently pred­i­cated on a seam­less Bor­der with prod­uct and raw ma­te­rial mov­ing daily be­tween its op­er­a­tions, North and South. “And ob­vi­ously we’d like that to con­tinue,” Mr Han­ley said, while not­ing the group was sce­nario plan­ning for both even­tu­al­i­ties.

He was speak­ing as the Ca­van-based co-op, the State’s sec­ond largest, posted a strong set of fi­nan­cial re­sults for 2017 driven by an un­prece­dented surge in but­ter prices glob­ally, one of the group’s prin­ci­pal com­modi­ties, which rose to a record €7,000a tonne last year.

This drove group rev­enue to a record €769.8mil­lion, up 28 per cent on the pre­vi­ous year, yield­ing an op­er­at­ing profit of €16.8mil­lion, com­pared to €7.2 mil­lion in 2016.

Milk vol­umes

The co-op, which ex­ports to more than 80 coun­tries, said milk vol­umes pro­cessed at its var­i­ous fa­cil­i­ties rose to a record 1.2 bil­lion litres, al­though part of the in­crease came from the ac­qui­si­tion of the neigh­bour­ing Fane Val­ley co-op’s dairy busi­ness in 2016.

Lake­land re­cently fin­ished build­ing a third milk pow­der pro­cess­ing fa­cil­ity, the biggest in the State, at its main Bailieboro cam­pus in Co Ca­van.

And to­gether with its new €10 mil­lion global lo­gis­tics cen­tre at New­tow­nards in Co Down, Mr Han­ley said it was ide­ally placed to min­imise the im­pact of Brexit and max­imise the dairy op­por­tu­nity in Asia and else­where. The group’s lat­est an­nual re­sults show its prin­ci­pal food in­gre­di­ents busi­ness, which pro­duces mainly but­ter and milk pow­der for ex­port, gen­er­ated rev­enues of nearly €469 mil­lion last year, up 32 per cent on 2016, on foot of what Lake­land de­scribed as “favourable mar­ket con­di­tions”.

As part of this, its Bailieboro plant pro­duced a record 200,000 tonnes of milk pow­ders and but­ters.

The group’s food­ser­vice busi­ness divi­sion, which pro­duces a line of dairy prod­ucts for re­tail, saw rev­enue rise 23 per cent to nearly €240 mil­lion, while its smaller argibusi­ness sec­tion saw rev­enue in­crease 16 per cent to €61.7 mil­lion.

“In 2017, Lake­land Dairies achieved per­for­mance im­prove­ments across all di­vi­sions of the busi­ness,” Mr Han­ley said.

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